With the recent upgrade

What upgrade exactly, to which version of TB?

If you upgraded to v68, then you must have done this manually. Automatic upgrades from v60 to v68 have not yet been enabled. Make sure to read the release notes for v68. https://www.thunderbird.net/en-US/thunderbird/68.0/releasenotes/

I have attached an image that shows that my settings re updates of Thunderbird was set to "automatically install updates (recommended improved security).

No where does it state that the update was not enabled!!!!!!

Please advise

Thunderbird can not maintain the status quo with themes and add-ons because they are essentially a part of the underlying Geko engine Thunderbird is built on. Geko being the shared component with Firefox and developed by Mozilla and the Firefox people.

The developers have been essentially fighting a loosing battle for years to keep old themes and add-ons functional while they build a new framework for Thunderbird largely based on Firefox's webextensions.

Why a new framework? Because Thunderbird is a small project and could not have carried the maintenance burden that went with this significant part of the code base, nor could they adopt the web extension process as it was focused of different thing to Thunderbird add-ons. Firefox being web centric and focused on limiting access to the local machine. Thunderbird being focused on mail and living on the local machine with most mail actions involving storage on the local machine. The two goals were not compatible. So Thunderbird now has a new webmail interface for add-ons and themes are not supported just as they are not in Firefox.